Intel's first-quarter profit fell about 56 percent from a year earlier, but Chief Executive Paul Otellini said PC sales were bottoming out.

Net income was $647 million, or 11 cents a share, down from $1.4 billion in the year-earlier period. Revenue was $7.1 billion, down about 27 percent from the $9.7 billion reported in the same period last year. Wall Street estimates were around 3 cents a share on revenue of $7 billion.

"We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," said Otellini, in a statement.

"I believe the worst is now behind us from an inventory correction and demand level adjustment perspective," Otellini said in prepared remarks during the company's earnings conference call Monday afternoon. He added that notebook inventory has now returned to normal levels.

"Everything I've seen suggests that the industry is at a new baseline," Otellini said, responding to an analyst's question during the conference call. "We're starting to see the normal (market) seasonality...and every sign we've seen in terms of markets recovering suggests that we're likely to see typical seasonality in the second half," he said.

Otellini also said in prepared remarks that the company had reduced inventory levels 19 percent below fourth-quarter levels and the number of employees had been reduced by 1,400 from the fourth quarter.

On the new product front, Otellini said that Intel's first 32-nanometer chip, Westmere, has been "pulled in" and will be shipping later this year.

The company said it is not providing a revenue outlook at this time.

"Due to continued economic uncertainty and limited visibility, Intel is not providing a revenue outlook at this time. For internal purposes, the company is currently planning for revenue approximately flat to the first quarter," Intel said.

Other Intel first-quarter 2009 earnings highlights:

Gross margin, a crucial indicator, was 45.6 percent, lower than the 53.1 percent in the fourth quarter.

Gross margin percentage in the second quarter is expected to be in the mid-40s.

Revenue from the Atom processor and chipsets was $219 million, down 27 percent sequentially.

Intel expects shipments of recently-introduced Nehalem processor to hit one million this month.

The average selling price for all microprocessors was approximately flat sequentially.

For full-year 2009, capital spending is expected to be slightly down from 2008.